By Tiernan Ray

Shares of server connectivity vendor Mellanox Technologies (MLNX) were halted this afternoon just before the company announced revenue in the Q4 ended last month will come in below prior expectations owing to weak demand and a product issue.

Revenue last quarter was in a range of $119 million to $121 million, less than the prior forecast of $145 million to $150 million, the company said. That is below the $148.1 million the Street has been modeling.

Mellanox explained the problem as a mixture of less-than-expected demand and technical issues:

A weaker demand environment, challenging macroeconomic conditions, and a technical issue associated with FDR 56Gb/s InfiniBand cabling which caused approximately $20 million of FDR deployments to be delayed. The cabling issue has been resolved and is not expected to impact revenue in the future.

Full results will be presented on January 23rd, following a management presentation at the Needham & Co. Growth Conference on January 17th.

Shares are expected to resume trading at 4:35 pm, Eastern time. The stock had risen $1.81, or 3%, to $61.19 during the regular session.

Update: Shares of Mellanox have resumed trading and are down $12.73, or 21%, at $48.46.

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There are 3 comments

JANUARY 2, 2013 4:56 P.M.

phileasfogg wrote:

MLNX holders should have been warned -- the short interest in the stock has been climbing and there was every indication that analysts were much too optimistic in their Q4 rev estimates. Very few analysts seem to update their numbers on a weekly or twice-monthly basis when market conditions change - many of them trim estimates well after the fact.

JANUARY 2, 2013 7:44 P.M.

Chickenpookie wrote:

Looks like another one of those pump and dump stocks, what a racket.

JANUARY 2, 2013 8:40 P.M.

goodwill wrote:

Lot of this seems to have been priced in. People who understand the company and the potential will step in with 2 hands. Oracle does not invest in companies without a future.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.